Business Research Methods

UMAIR AHMED Registration No: 18

ABDURREHMAN ZAFAR Registration No: 38

Arbaz Registration No: 53

Assignment No 1
MCOM 7A
Sir Bilal Ahmad
Respected Sir,
We are thankful to you for allowing us to work on the topic “Impact of CPEC on
the economy of Pakistan and afterwards on the businesses in Pakistan.
“Impact of CPEC on the economy of Pakistan and afterwards on the
businesses in Pakistan”

Introduction

The geographical nearness of Pakistan and China enhances geo-economics worth to their overall
relationship. To enhance the benefits of their common border, the two sides in 1982
accomplished the legendary Karakorum Highway (KKH), linking China’s Kashgar to Pakistan’s
Islamabad, through the Khunjerab Pass. Throughout the 2000s, the highway was stretched and
modernized to make it functioning for all kinds of traffic, year round. An internal network of
roads connects KKH with Pakistan’s Gwadar and Karachi ports in the south of the country
(Khurram Dastagheer, 2015)

The CPEC will behave as a channel for the novel Maritime Silk Route that imagines connecting
three billion people in Asia, Africa and Europe. A leading project of the one Belt and one Road
initiative as well, the CPEC aims to revive the earliest Silk Road with an emphasis on
infrastructure, and establishes the strategic structure of bilateral cooperation. (Saqib and Qi,
2014).Today, Pakistani–Chinese diplomatic engagement follows a pattern that has been called a
“subtle partnership.” It does “the minimum necessary to preserve Pakistani security from a
distance, but it has sought to avoid all overt entanglements” in Islamabad’s challenges to Indian
primacy in South Asia. Closer economic relations between China and Pakistan risk irking India.
(Arooj Naveed, 2015) While China has been important to the world economy for decades, the
country is now wielding its financial heft with the confidence and purpose of a global
superpower. With the center of financial gravity shifting, China is aggressively asserting its
economic clout to win diplomatic allies, invest its vast wealth, promote its currency and secure
much-needed natural resources. (Krepon, 2015)

Pakistan’s economy is meager not owing to its less resources but because of corruption at the top
echelon of the country including government and military officials. Still if these corrupt officials
keep black money at home, its economy will grow. The CPEC is going to give Pakistan’s
economy an unconditional boost. Its geographical location gives Pakistan an edge just to take
annual rent of the port and enjoy the life. As compare to this Indian economy is more in bad
shape as compare to Pakistan because Indian economic policy ignores 40% of the population
while making any national economic policy that is increasing poverty in India at an alarming
level.(Rana Ejaz Ahmad, 2015)

South Asia is one of the least economically integrated regions in the world – SubSaharan Africa,
the Middle East, and North Africa all have higher intra-regional trade. Intra-regional trade is only
3-5% of the total trade of the region, representing just over 1% of regional GDP, while this
percentage is 7% in East Asia. India’s trade with its neighbors is less than 3% of its total trade.
These challenges have an immense impact on South Asia’s economies. However, China, with the
second largest economy in the world, wants to use its economic influence in the region. The
China-Pakistan Economic Corridor (CPEC) is one of the key components of China and
Pakistan’s plan to improve economy of Pakistan and trade benefits to China ( Zainab
Ahmed,2015)

Background
Pak-china economic corridor is an example of bilateral trade between the two countries. China
and Pakistan have developed strong bilateral trade and economic ties and cooperation over the
years. China has gradually emerged as Pakistan’s major trading partner both in terms of exports
and imports. Bilateral trade and commercial links between the two countries were established in
January 1963. Free Trade Agreement (FTA) between the two countries – signed on November
24, 2006 and implemented from July 1, 2007. Opened for operations in 2007, the control of
Gwadar Port was transferred to China’s state-owned China Overseas Ports Holding in February
2013. Since then, Gwadar is undergoing a major expansion to turn it into a full-fledged, deep-
water commercial port (South China Morning Post, 2014).

It will serve as a primary gateway for trade between China and the Middle East and Africa. The
corridor is expected to cut the 12,000-kilometre route that Middle East oil supplies must now
take to reach Chinese ports (Ibid). Besides meeting China’s needs in energy and developing its
far west region and upgrading Pakistan’s economy, the CPEC is expected to benefit the people of
countries in South Asia, contributing towards maintaining regional stability as well as economic
integration (China Daily, 2013).

Literature Review
China and Pakistan privilege to have an “all-weather” friendship. Their geographical nearness
enhances geo-economics worth to their overall relationship. To enhance the benefits of their
common border, the two sides in 1982 accomplished the legendary Karakorum Highway (KKH),
linking China’s Kashgar to Pakistan’s Islamabad, through the Khunjerab Pass. Throughout the
2000s, the highway was stretched and modernized to make it functioning for all kinds of traffic,
year round. An internal network of roads connects KKH with Pakistan’s Gwadar and Karachi
ports in the south of the country (Ghulam, 2015)

In addition, the precious stone in the crown for China is the development of Gwadar port and
Gwadar region (Saqib and Qi, 2014), as Gawadar port is a vital part of CPEC which would
provide Beijing a firm and trustworthy long-term foothold in the Indian Ocean and adjacent to
the Persian Gulf, efficiently making it a two-ocean power. The CPEC will behave as a channel
for the novel Maritime Silk Route that imagines connecting three billion people in Asia, Africa
and Europe. A leading project of the one Belt and one Road initiative as well, the CPEC aims to
revive the earliest Silk Road with an emphasis on infrastructure, and establishes the strategic
structure of bilateral cooperation. (Saqib and Qi, 2014).

Scope of the study

The scope of this study is to develop a common understanding about the importance of the
project; Pak-china economic corridor and its impact on the economy of the country and the sub-
continent. As well as the need to develop distance shortening routes both corridors and maritime
to boost up the economy as well as to develop bilateral and strategic relationship between the
countries. The study focusing on enhancing the factors affecting the project as well as the
economy of Pakistan. It elaborates how beneficial the project is, not only for Pakistan but also
for china and others neighboring countries, especially the land lock one. Analysis of various
researches has been carried out to identify various variables and aspects for understanding and
elaborating the accountability and need to increase the volume of maritime trade and short trade
routes to link countries, necessitate handling the growing volume of trade through such type of
free trade agreement projects. It also enhances the role and importance of Gawadar port as a
primary gateway for trade between China and the Middle East and Africa.

THE RESEARCH QUESTION

The importance of the mega project CPEC is still not being realized by many, due to lack of
coherent and consistent academic work on this project. However there’s a bit and pieces of
information do exist but, a coherent and comprehensive work is still required.

In order to provide a comprehensive and coherent piece of information to enhance the

importance of this mega and economy boosting project as well as its impact on the economy not
only of Pakistan but also of the sub-continent, the paper addressed the research question;

“What will the Impact of Pak-china economic corridor on the economy of Pakistan?”

Variables
DEPENDENT VARIABLES

 Economy
 Trade

INDEPENDENT VARIABLE

 Political Stability
 Security
 Geographical Location
 Route
 Administrative
 Relationship with Neighbor countries

MEDIATING VARIABLES

 China-Pak Economy Corridor

MODERATING VARIABLES
  Terrorism
 Visionary Leadership

HYPOTHESIS
Pakistan needs political stability and continuity of democratic process to ensure economic
growth and trade.

 There is positive correlation between Security and development of economy and trade
sector.

 Routes have great impact on CPEC as china will receive their shipment in 10 days that
will improve their and Pakistan’s Economy.

 Strong administration will give boost Pakistan Economy as well as manage operation of
CPEC.